2025 (1) TMI 315 - AT - IBC

Challenge to Impugned Order - failure to consider the changed circumstances - failure to appreciate that the OTS offer stood to benefit the stakeholders more than the approved Resolution Plan - HELD THAT - It is to be kept in mind that the submission of the one-time settlement proposal as prayed for in the Interlocutory Application being IA (IBC) No. 1862/2024, could not be considered by the Learned Adjudicating Authority for the reason being that, on earlier three occasions, the OTS proposals had already stood rejected and also because of the fact that Resolution Plan as of now has already been approved on 07.12.2023. Therefore, with regard to the instant OTS proposal submitted on 03.09.2024, by virtue of IA No. 1862/2024, there was no scope open for the said proposal to be considered to be accepted and consequentially the Impugned Order that was passed thereon, holding that the OTS proposal as prayed for in IA (IBC) No. 1862/2024, could not be considered and is not maintainable as the Resolution Plan has already been approved, cannot be faulted. The view expressed by the Learned Adjudicating Authority in the Impugned Order of 12.09.2024, holding OTS proposal to be not maintainable due to the fact of the Resolution Plan already having been approved cannot be faulted of in any manner whatsoever, as new chapter cannot be permitted to be opened, when the Appellant himself has failed on three earlier occasions to get his OTS proposals approved and because of the fact that the Resolution Plan as of now has already been approved. In these circumstances, the application being IA (IBC) No. 1862/2024, could not have been considered by the Learned Adjudicating Authority and the same has been rightly rejected by the Impugned Order, which does not call for any interference in the exercise of the Appellate jurisdiction by this Appellate Tribunal under Section 61 of I B Code, 2016. Conclusion - The view expressed by the Learned Adjudicating Authority in the Impugned Order of 12.09.2024, holding OTS proposal to be not maintainable due to the fact of the Resolution Plan already having been approved cannot be faulted. The finality of an approved Resolution Plan in insolvency proceedings is paramount, and subsequent settlement proposals cannot be entertained unless there are compelling reasons. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the Impugned Order dated 12.09.2024, dismissing the Appellant's application containing an OTS proposal, was valid given the prior approval of a Resolution Plan.
Whether the Learned Adjudicating Authority erred by not considering the Appellant's OTS proposal in light of the changed circumstances and its potential benefits over the approved Resolution Plan.
Whether the Appellant's repeated OTS proposals, following previous rejections, could be entertained post-approval of the Resolution Plan.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Impugned Order dismissing the OTS proposal

Relevant legal framework and precedents: The Insolvency and Bankruptcy Code, 2016, particularly Section 7, governs the initiation of CIRP proceedings. The approval of a Resolution Plan by the NCLT is a significant milestone in the insolvency process.
Court's interpretation and reasoning: The court reasoned that once a Resolution Plan is approved, subsequent OTS proposals are not maintainable. The authority emphasized the finality of the approved Resolution Plan.
Key evidence and findings: The Appellant had submitted multiple OTS proposals, which were repeatedly rejected. The Resolution Plan was already approved on 07.12.2023, making the new OTS proposal redundant.
Application of law to facts: The court applied the principle that an approved Resolution Plan cannot be reopened for consideration of new settlement proposals.
Treatment of competing arguments: The Appellant argued that his OTS proposal offered better recovery. However, the court held that the procedural finality of the Resolution Plan takes precedence.
Conclusions: The Impugned Order was upheld as the OTS proposal was not maintainable post-approval of the Resolution Plan.

Issue 2: Consideration of changed circumstances and potential benefits of the OTS proposal

Relevant legal framework and precedents: The insolvency framework provides for the approval of a Resolution Plan as a binding outcome unless there are substantial reasons to revisit it.
Court's interpretation and reasoning: The court noted that the Appellant's circumstances did not justify reopening the approved Resolution Plan, especially given the prior rejections of similar proposals.
Key evidence and findings: The Appellant's argument of changed circumstances was not supported by any new evidence that could override the approved Resolution Plan.
Application of law to facts: The court applied the principle of finality in insolvency proceedings, emphasizing the need for certainty and closure.
Treatment of competing arguments: The Appellant's argument was considered but ultimately dismissed due to lack of substantial change in circumstances.
Conclusions: The court concluded that the OTS proposal could not be entertained given the procedural finality of the Resolution Plan.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The view expressed by the Learned Adjudicating Authority in the Impugned Order of 12.09.2024, holding OTS proposal to be not maintainable due to the fact of the Resolution Plan already having been approved cannot be faulted of in any manner whatsoever."
Core principles established: The finality of an approved Resolution Plan in insolvency proceedings is paramount, and subsequent settlement proposals cannot be entertained unless there are compelling reasons.
Final determinations on each issue: The Appellant's appeal was dismissed as lacking merit, affirming the Impugned Order's decision to reject the OTS proposal.

This judgment underscores the importance of adhering to the procedural finality of Resolution Plans in insolvency proceedings, emphasizing that new settlement proposals post-approval are generally not maintainable unless there are extraordinary circumstances justifying such reconsideration.

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